Related to this story

James Cutler and his partners in Appalachian Resins Inc. don't seem to mind the questions being thrown their way. The group has plans to open a plant with 500 million pounds of annual PE capacity — which could be used for high or linear low density PE — at an undisclosed location south of Wheeling, W.Va.

The plant would include 500 million pounds of annual ethylene feedstock capacity, all of which would be used internally to make PE. If all goes according to plan, construction on the plant, which would include its own ethane-based ethylene cracker, will begin by the end of 2013, and PE made there could be for sale by the end of 2015.

Details of the Appalachian Resins plan — including site location and information about project investors — should be released by the end of February, Cutler said in a recent phone interview.

The entire proposal is being made possible by newfound supplies of natural gas throughout the region, which includes both the Marcellus and Utica shale gas fields. The AR plant would be sourced from the Marcellus field. Natural gas can be refined to make ethane, which is then converted into ethylene monomer and then into PE.

"In the 1960s, the petrochemical industry was an extension of the refining industry, and the decision was made to build petrochemical plants on the Gulf Coast, because that's where the feedstocks were," said Cutler, who is CEO. "But now people don't know what to do with all this natural gas — there's no shortage of it."

Cutler has more than 20 years of experience as a consultant with Petral Worldwide Inc., an oil and gas consulting firm based in Houston. Prior to joining Petral, Cutler held chemical-related positions with oil and gas firm Texaco Inc. and its predecessor, Getty Oil.

Appalachian Resins' proposed plant won't be disadvantaged against larger PE plants, and will offer logistical advantages, according to Cutler.

"There aren't a lot of economies of scale with ethane, so, if you look at the yields, it doesn't matter if you build a big plant or a small plant," Cutler said. "When you crack ethane, you get 80 percent ethylene.

"When you crack propane you get only 30 percent ethylene, and when you crack heavier feeds [from crude oil] you get more co-products, so you need more hardware to handle it and you need bigger furnaces.

"With heavier feeds, you're building a refinery for all practical purposes," he added. "With ethane, essentially the only product you make is ethylene."

Shell Chemical Co.'s pending decision on a proposed petrochemicals plant in Monaca, Pa. — near Pittsburgh and not far from Wheeling — won't affect Appalachian Resins' plans. Shell has an option to buy land there, but recently was given a six-month extension on that option.

"We're not really that concerned with what they do," Cutler said of the Shell project. "Our raw material needs will be less than what [Shell] has proposed."

PE made at the AR site would be sold within a 500-mile radius, including most of the Midwest. Having a plant located closer to PE users also would provide a transportation advantage, Cutler noted.

"Polyethylene currently is moved around the country from the Gulf Coast," he said. "It goes from railcars into trucks and there are big freight costs. And every time we have a hurricane or a flood, the price of polyethylene goes up.

"It's a 1,500-mile supply chain that's prone to natural disasters and turnarounds," Cutler said. "If we had multiple smaller plants in Ohio and West Virginia, there would be more resiliency in the system and freight saving of about 6 cents per pound, because we'd be using trucks, not railcars."

The AR plant would require 14,000 barrels of ethane per day, which Cutler said would be sourced from natural gas plants in the region. He added that as a smaller, more flexible plant, the AR site would be able to switch among different grades of HDPE and LLDPE for different applications, based on customers' needs. The AR plant would employ 125 and would create numerous other jobs in the area, according to Cutler.

Cutler's partners in AR are:

Robert Mifflin, president, another longtime Petral consultant who, like Cutler, had extensive experience at Texaco and Getty, including stints as construction manager and manager of a Texaco refinery.

William Urquhart, who has industry experience with Exxon Chemical Americas and who previously worked as a consultant with Houston firms Townsend Polymer Services and Bonner & Moore. With AR, Urquhart will be responsible for working with customers and coordinating their contractual PE requirements.

Chris Walsgrove, who holds several ethylene-related patents and has industry experience with Linde AG and Stone & Webster. Walsgrove has been involved in opening ethylene plants around the world and currently teaches plant startup and safety at global seminars.

Cutler has high hopes for AR, and he knows the process of starting a new plant and a new firm takes time.

"Our [PE] production will all be based on the customer," he said. "The model [of PE production] that's been in use isn't necessarily the best model for today."

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

This report analyzes the $20 billion plastics industry in Mexico including sales of machinery & equipment, resins and finished products.

Our analysts provide insight on business trends, foreign investment, top end markets and plastics processing activity. The report also provides important data on exports, production, employment and value of plastics products manufactured.